CHAPTER 6. LEASE REQUIREMENTS AND LEASING ACTIVITIES …

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CHAPTER 6. LEASE REQUIREMENTS AND LEASING ACTIVITIES

6-1 Introduction

A. The previous chapters provided guidance on determining eligibility, organizing and managing waiting lists, determining income, and calculating rents. At this point in the process, residents are ready to sign a lease. A lease is a contract between the owner and tenant that explains the terms for residing in the unit. A lease is a legally binding contract and is enforceable in a court of law. Owners and tenants alike should be familiar with the provisions of the lease (when relevant, the applicable HUD model lease) so they can better understand their responsibilities under the lease.

B. Chapter 6 contains information on the lease and the activities associated with the leasing process. The information is organized as follows:

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Section 1: Leases and Lease Attachments describes the lease

requirements for the applicable programs described in paragraph 1-3. It

also addresses lease documents that must be attached to the lease,

when applicable. The section ends with a discussion on amending and

modifying a lease.

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Section 2: Security Deposits discusses the requirements and

procedures regarding security deposits.

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Section 3: Charges in Addition to Rent discusses the allowable and

prohibited charges that owners may levy. These charges are those other

than rent, which is addressed in Chapter 5, Section 4 about calculating

tenant rent, and other than security deposits, which are discussed in

Section 2 of this chapter.

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Section 4: The Leasing Process discusses the requirements and

procedures for two activities associated with the leasing process: briefing

new residents and inspecting units. It also addresses the handouts that

owners must provide tenants, such as the lease, the Residents Rights

and Responsibilities brochure, and the lead-based paint disclosure form.

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6-2 Key Terms

A. There are a number of technical terms used in this chapter that have very specific definitions established by federal statute or regulations or by HUD. These terms are listed in Figure 6-1, and their definitions can be found in the Glossary to this handbook. It is important to be familiar with these definitions when reading this chapter.

B. The terms "disability" and "persons with disabilities" are used in two contexts ? for civil rights protections, and for program eligibility purposes. Each use has specific definitions.

1. When used in context of protection from discrimination or improving the accessibility of housing, the civil rights-related definitions apply.

2. When used in the context of eligibility under multifamily subsidized housing programs, the program eligibility definitions apply.

NOTE: See the Glossary for specific definitions and paragraph 2-23 for an explanation of this difference.

Figure 6-1: Key Terms

? Assisted tenant ? Assistance animals ? Briefing ? Common household pet ? Covered person ? Currently engaging in ? Drug ? Drug-related criminal activity ? Expected to reside ? Law enforcement agency ? Lease ? Lease term ? Legitimate tenant organization

? Minimum rent ? Other person under the

tenant's control ? Pet deposit ? Premises ? Security deposit ? Service animals ? Tenant ? Tenant consultation ? Tenant rent ? Total tenant payment ? Violent criminal activity

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Section 1: Leases and Lease Attachments

6-3 Key Regulations

This paragraph identifies key regulatory citations pertaining to Section 1: Leases and Lease Attachments. The citations and their titles (or topics) are listed below.

A. Lease Requirements

1. 24 CFR 5.360, 891.425 Housing Programs: Additional Lease Provisions

2. 24 CFR 236.750, 886.127, 886.327, 891.425 (Form of lease)

3. 24 CFR 880.606, 881.601, 883.701, 884.215, 886.127, 886.327, 891.425, 891.625, 891.765 Lease Requirements

4. 24 CFR 880.606, 881.601, **883.701**, 884.215, 886.127, 886.327, 891.425, 891.625, 891.765 (Lease term)

5. 24 CFR 884.215 (RHS 515/Section 8 properties lease requirements)

6. 24 CFR 891.425, 891.625, 891.765 (Section 202 and Section 811 properties lease requirements)

B. Lead-Based Paint

1. 24 CFR part 35, subpart A and 40 CFR, part 745 (Requirements for disclosure of known lead-based paint and/or lead-based paint hazards in housing)

2. 24 CFR 35.130 Lead Hazard Information Pamphlet

C. Pet Regulations

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24 CFR part 5, subpart C ? Pet Ownership for the Elderly or Persons with

Disabilities

D. Amending the Lease

1. 24 CFR 247.4, 891.430 (Termination notice)

2. 24 CFR 247.4, 880.607, 881.601, 883.701 (Increase in rent)

3. 24 CFR 247.4, 880.607, 881.601, 883.701, 891.430 (Modifying the lease)

6-4 Leases and Lease Attachments ? General

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Section 1: Leases and Lease Attachments

A. This section identifies the regulatory requirements regarding an owner's lease and the lease attachments, including the lead-based paint disclosure form, house rules, and pet regulations. It also describes procedures for meeting these requirements, identifying which procedures are required and which are optional. Throughout this section, the differences in policies and procedural requirements across the four model leases are identified.

**NOTE: The leases may also need to be conveyed in languages other than English for LEP persons, when applicable, in accordance with HUD guidance, Final Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons, published in the Federal Register on January 22, 2007.**

B. The lease is a legally binding contract between the owner and the tenant. The regulations governing HUD's various multifamily housing programs state that owners must use leases that are in an acceptable form to HUD. In practice, owners must use one of the four model leases prescribed by HUD (see Figure 6-2). The lease an owner uses depends on the program being administered.

1. Owners may, but are not required to, use the HUD model leases for units where the tenant pays market rent, full contract rent, or 110% of the BMIR rent in the case of Section 221(d)(3) BMIR properties.

2. The HUD model leases do not apply to cooperatives. Cooperative members should use occupancy agreements. All occupancy agreements executed after February 15, 1984 must include the cooperative's policy on unit transfers and **paragraphs 15, 16, 17, 23 and 25 of the Model Lease for Subsidized Programs covering recertification, termination of assistance, and fraud penalties.**(See paragraph 6-5 A for more information.)

C. The HUD model leases identify the program requirements that owners and tenants must adhere to while participating in the programs. Although many of these requirements are the same in each of the four leases, several of the lease provisions vary from lease to lease. For example, changes in the tenant rent are listed in all four model leases; however, the specific requirements and language are different among the four leases.

D. Changes to the Model Lease for Subsidized Programs may be only for documented state or local laws, or a management practice generally used by management entities of assisted projects. Before implementing lease changes, owners must obtain written approval from HUD or the Contract Administrator. The Model Lease for section 202/8 or Section 202 PACs may only be modified for documented state or local laws or as specifically noted in paragraph 6-5 D. The Model Leases for Section 202 PRACs and Section 811 PRACs may only be modified for documented state or local laws or as specifically noted in paragraph 6-5 E.

E. If any provision of a model lease conflicts with state or local law, the owner must follow the rule that is of most benefit to the tenant.

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6-5 Lease Requirements

A. Form of Lease

1. Model leases. HUD has provided model leases that must be used under certain programs. Figure 6-2 identifies the appropriate lease for HUD's subsidized programs.

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Figure 6-2: Required Leases

Section 1: Leases and Lease Attachments

Form of Lease

Programs that Use the Lease

Model Lease for Subsidized Programs (Family Model Lease) (See Appendix 4-A.)

Section 221(d)(3) BMIR Section 236 Section 8 New Construction

Section 8 Substantial Rehabilitation

Section 8 State Agency (See Paragraph 6.5F)

RHS 515 with Section 8 (See Paragraph 6.5 F)

Section 8 Loan Management Set-Aside (LMSA)

Section 8 Property Disposition Set-Aside (PDSA)

**Rental Assistant Payment (RAP)

Rent Supplement**

Model Lease for Section 202/8 or Section 202 Section 202 Programs for the Elderly and

PACs

Persons with Disabilities in conjunction with

(See Appendix 4-B.)

Section 8 assistance

Section 202 Programs for the Nonelderly Disabled Families and Individuals in conjunction with Section 162 assistance

Model Lease for Section 202 PRACs (See Appendix 4-C.)

Section 202 Program of Supportive Housing for the Elderly

Model Lease for Section 811 PRACs (See Appendix 4-D.)

Section 811 Program of Supportive Housing for Persons with Disabilities

A model lease developed by a State Agency that complies with HUD rules and regulations

Occupancy Agreement

Section 8 State Agency Assisted Cooperatives

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2. For projects financed by a State Agency, owners must use the lease form prescribed by the State Agency or obtain the State Agency's approval for changes to that lease. (State Agencies must ensure that the lease form is consistent with HUD regulations and the rules in this handbook.)

3. Cooperatives. Although a family receiving Section 8 assistance and residing in a cooperative is subject to the same regulatory tenancy requirements as other Section 8-assisted families, cooperatives use HUD-approved occupancy agreements in lieu of a model lease.

Occupancy agreements for assisted cooperatives must incorporate the cooperative's policy on unit transfers and paragraphs 15, 16, 17, 23 and 25 of the Model Lease for Subsidized Programs covering recertification, termination of assistance, and fraud penalties.

4. Required attachments.

The following documents must be attached to the lease:

a. HUD-50059 signed by the tenant and the owner;

b. *HUD-50059-A signed by the owner and, when applicable, by the tenant.*

c. Move-in inspection report signed by both the owner and tenant;

d. House Rules, if such rules have been developed by the owner;

e. Lead-based paint disclosure form (if applicable);

f.

Pet rules (if applicable); and

g. Live-in Aide addendum (if applicable).

NOTE: The live-in aide addendum must establish that a live-in aide is not eligible to remain in the unit once the tenant is no longer living in the unit, regardless of the circumstances for the tenant's departure. The live-in aide addendum may give the owner the right to evict a live-in aide who violates any of the house rules.

B. Key Requirements under HUD's Model Leases

1. The lease may cover only rental of the unit and provision of services routinely provided at rental properties (e.g., parking).

a. Owners and tenants must execute separate agreements for special services (e.g., voluntary meals program or health care services).

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b. Failure to adhere to these separate agreements is not grounds for termination of tenancy, except that:

Tenant participation in a mandatory meals program is incorporated as a condition of occupancy in rental properties for the elderly or handicapped with HUD-approved mandatory meals programs. Under these conditions, compliance is binding on the tenant as a lease provision.

2. The head of household, spouse, any individual listed as co-head, and all adult members of the household must sign the lease.

3. When a tenant transfers to another unit, the owner and all tenants required to sign the lease must sign a lease for the new unit.

4. The lease includes language permitting the owner to terminate the lease for drug-related activity and criminal activity. This is the result of regulations effective June 25, 2001, for Screening and Eviction of Drug Abuse and Other Criminal Activity. For more information, refer to the lease and Chapter 8 for information regarding terminations.

C. Model Lease for Subsidized Programs

1. Applicability. The following properties use the Model Lease for Subsidized Programs (also known as the family model lease):

a. Section 221(d)(3) BMIR;

b. Section 236 Interest Reduction;

c. Section 8 New Construction;

d. Section 8 Substantial Rehabilitation;

e. RHS 515 with Section 8 (see Paragraph 6-5 F);

f.

Section 8 Loan Management Set-Aside (LMSA); and

g. Section 8 Property Disposition Set-Aside (PDSA).

h. **Rental Assistance Payment (RAP)

i.

Rent Supplement**

2. HUD will permit modifications to the Model Lease for Subsidized Programs, but modifications must be approved by HUD or the Contract Administrator. (See paragraph 6-12 for modification procedures, and paragraphs 6-11 and 6-12 on amending and modifying leases for more information.)

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